Property and Asset seizures to collect federal student loans

Federal student loan collection power have grown so much over time that the government rarely sues borrowers, opting instead for an array of extra-judicial collection tools.

Tax Refund Offsets

The tax refund offset program involves a blanket seizure of almost all tax refunds due to debtors who are in default on their student loans.  Amounts offset may include “special” payments such as economic stimulus refunds.

Bankruptcy and Tax Offsets

Filing a personal bankruptcy petition before the offset activates the United States Bankruptcy Code automatic stay provision.  The stay prohibits virtually all actions against the debtor’s property, including intercepts of owed tax refunds based on a student loan default.

Non-Judicial Wage Garnishment

Both the Higher Education Act and the Debt Collection Improvement Act authorize administrative wage garnishment.  This means you can have your wages garnished without having a judgment entered against you.  You can have up to 15% of your disposable pay garnished for default on a student loan.  Guaranty agencies can also garnish your wages.

Seizure of Federal Benefits

You can also have your federal benefits offset.  Offset is explicitly allowed against Social Security benefits for instance.

If you are in default on your student loans, please contact the Zarcone Law Firm at 619-800-3082 for a FREE consultation.


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The content found on the financialfreshstart Blog is not legal advice and is purely for informational purposes. The Zarcone Law Firm does not guarantee the accuracy, integrity or quality of submissions. The information provided by the bloggers on this site may not represent the opinions of the Zarcone Law Firm or its affiliates. The information contained herein is not a substitute for the advice of an attorney.

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